The US is expected to offer the best regional returns for 2025 by 38.9% of fund groups, attracting over double the attention of any other region, according to research by Quilter Investors.
Following the US, China and Japan both were marked as the most promising region by 16.7% of investors, while the UK and emerging markets each attracted 11.1%. Europe ex UK lagged other regions, with just 5.6% believing it would top the charts, and 37.5% expecting it to be the worst-performing for 2025.
The confidence in the US market coincides with the first year of Donald Trump’s second term as president, as markets try to determine what policies will be put in place around issues including tariffs and immigration.
Fund managers have a large range of expectations: on a scale of positive to negative five for how the market would be affected by Trump, scores ranged from positive five to negative two. On average, investors anticipated a weak net positive of one.
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Lindsay James, investment strategist at Quilter Investors, said: “It is perhaps unsurprising to see the US coming out on top of the expected returns table from leading fund managers. It has proven to be an incredibly resilient economy that has been able withstand the high interest rate environment. Coupled with Donald Trump’s re-entry into the White House, where he has promised increased fiscal spending and deregulation, conditions look ripe for a stock market boon.
“However, Trump and his economic policies threaten to throw a spanner in the works over the long-term. Isolationist policies have a history of driving up inflation and with it interest rates. For a man who wants the stock market to be a barometer of his success he will not want to drastically upset investors by causing any share price corrections. It will be a fascinating balance to watch him try to achieve.”
Despite the uncertainty around Trump, just 12.5% of managers believe the US will be the worst performer of 2025.
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In general, macro factors such as changing demographics and artificial intelligence had little effect on holdings for over half of managers. Just a quarter of managers said this had a significant impact on their holdings currently. However, 35.7% of fund managers believe this will have an effect on how they invest in the future.
“Demographic changes are not helping European nations and you unfortunately have a cocktail for higher fiscal requirements and thus higher taxes. It was surprising, therefore, to see fund managers not think demographic change needs to be accounted for in portfolios now,” James said.
“The makeup of the world is changing rapidly and there will come a point for many governments and corporates where it is too late to adapt their strategy and instead be in damage limitation mode. It would not be a surprise to see this issue rise up the agenda for asset managers in the coming years.”
